In a response to Cardi B’s query on whether crypto will replace the dollar, Twitter’s Jack Dorsey replied “Yes, Bitcoin will.” While Bitcoin has enjoyed a renaissance in 2021, there are still problems that the cryptocurrency must face before any such predictions can be made. One fintech CEO believes the greatest of which resides in the custody realm.
“Dorsey’s prediction may well run into a few problems. The first being that total Bitcoins are capped at 21 million, and, of that number, a fair amount have been lost forever. The second problem is that you’re talking about an asset which is mostly controlled by only a handful of whales. Both of those become problems when you’re theorizing that Bitcoin could usurp the place of the dollar as currency. Even Elon Musk alluded to these issues with Bitcoin in a recent exchange. But, beyond that, right now, there’s a custody issue that most people haven’t fully considered. Until we figure out custody, digital assets will not reach their full potential,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“Functionally, what happens to your digital assets after you buy them? Most investors don’t fully understand this piece. There’s the possibility for self-custody, which can be a challenge for investors without a great deal of technological understanding. It leads to lost assets. Not through malfeasance, but through simple incompetence. We’ve all heard the stories about the folks who stored their Bitcoin on a flash drive and, over the years, have thrown it away or lost it. Beyond self-custody, there is the option to leave them in your exchange or move them to a custodian. Institutional investors, and even most exchanges use some form of custody vendor. However the options on the table at the current time are not suitable for the kind of scope to which Dorsey alludes,” said Gardner.
“Consider that one of the leading providers of custody has been embroiled in a lawsuit which alleges that they are responsible for the loss of $70 million in digital assets. Imagine, if you will, that your city or provincial government simply lost $70 million. Can you imagine that? It is not acceptable. In order for digital assets to expand to take on a greater role in the financial world, the industry must solve its custody conundrum,” noted Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“I think that we’re likely to see custody addressed in 2022. One way or the other, as in the Jack Nicholson movie, something’s gotta give. In order for digital assets to truly expand and be more widely viable, firms with a security mindset must step up and provide a custody option which is safe and secure from both malfeasance and incompetence. Right now, that is lacking,” noted Gardner.
The Fed’s Failure on Inflation is Bullish for Bitcoin: Nigel Green
The U.S. Federal Reserve’s failure on inflation will help drive the price of Bitcoin skywards, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The assessment from deVere Group’s Nigel Green, a high-profile crypto advocate, comes as the U.S. consumer price index jumped 7% in 2021, the largest 12-month gain since June 1982. The widely followed inflation index increased 0.5% from November, exceeding forecasts.
He notes: “Last year, the Federal Reserve said that inflation in 2021 would be at 1.8%.
“However, U.S. prices soared last year by the highest level in nearly four decades, draining the purchasing power of American households.
“Inflation is everywhere, and it could be around for longer than anyone would like.
“So, why didn’t the Fed – the central bank of the world’s largest economy – not see what was coming?
“Could they seriously not see how supply chain bottlenecks and a shortage of qualified workers would drive up prices and erode people’s and firms’ spending power?”
He continues: “Surely, this must be the biggest miscalculation in the history of the U.S. central bank.
“It shows how the traditional fiat system, of which it is a key component as it is charged with maintaining price stability, is dangerously out of step with reality.
“I believe this will fuel the demand – and therefore the price of Bitcoin and other cryptocurrencies.”
Why is this so?
With Bitcoin’s fixed supply of 21 million, and institutional investors increasingly moving off the sidelines and into the crypto market, it’s going to continue to outpace gold as a safe haven for capital, says Nigel Green.
“Money flows to where it gets its best treatment, and with treasuries yielding negative in real terms, moving capital into the Fed is a clear liability for investors.
“In addition, in this current inflationary period, Bitcoin has outperformed gold which, until now, has always been almost universally hailed as the ultimate inflation hedge.”
Bitcoin is often referred to as ‘digital gold’ because like the precious metal it is a medium of exchange, a unit of account, non-sovereign, decentralized, scarce, and a store of value.
“Yet, the cryptocurrency, Bitcoin is superior to gold as a medium of exchange or form of payment,” says Nigel Green.
“Unlike gold, it is a fixed unit of account and easily divisible and transportable. Gold is not easily immediately divisible, and there are potential issues with purity and verification. Whereas Bitcoin is easily traced on blockchain technology and this is going to be a considerable advantage, especially in cross-border transactions.”
He concludes: “The Fed has lost control on prices and investors are looking for safe havens to protect their purchasing power.
“Bitcoin is primed to provide the inflation shield so many are now seeking, especially as our lives and the global economy is increasingly run on tech and digital solutions, and this megatrend is only set to become more dominant moving forward.”
New Analysis from AI Company Identifies Daily Bitcoin Volatility Peaks
Bitcoin volatility peaks at 3pm before the New York Stock Exchange closes as well as spiking at 3am Eastern Standard Time, according to new analysis from GNY, the leading blockchain-based machine learning business.
Its analysis of trading data throughout 2021 found 3pm in the US – or 8pm in the UK – is the time to avoid for Bitcoin traders wanting to minimize volatility while 3am in the US – 1.30pm in India – is also a time for high volatility.
GNY’s analysis of 25 input data features found that trading data – whether volumes are high or low on average or whether Bitcoin prices are seeing major positive or negative moves – is the only mathematical relationship with volatility.
Factors such as LIBOR, gold prices, the Federal Funds rate or US inflation have no mathematical relationship with Bitcoin volatility.
GNY analysis reveals daily average Bitcoin volatility was 4.1% last year with daily volatility ranging between 4% and 10% when trading volume is above average and between 2% and 5% when volumes are below average.
GNY’s analysis of the most volatile days for Bitcoin trading in 2021 found August 2nd was the most volatile day with average daily volatility of 18.79% followed by May 19th with 13.83% and January 21st with 13.28%.
Its own research (2) shows one in five (22%) Bitcoin traders who trade at least $1,000 a month in the cryptocurrency expect the level of volatility to increase dramatically in 2022, and further 57% say it will increase slightly. Only 18% expect it to fall or stay the same.
Cosmas Wong, CEO GNY said: “Our mission at GNY is to bring machine learning tools to the crypto community to facilitate smarter business and trading decisions. Predicting Bitcoin volatility is the most impactful metric in blockchain right now.
“Our research has helped us understand the time based fluctuations in price and volume, as well as the patterns generated by market activity. Our nuanced machine learning models allow us to create a superior BTC prediction model.”
GNY recently launched the BTC Range Report, providing some of the most accurate forecasts around Bitcoin volatility of any platform or service available today. Extensive testing of BTC Range Report has delivered a mean absolute percentage error (MAPE) of between 3% and 7% making it one of the most powerful BTC prediction tools in the market. The average of the majority of competitor BTC prediction tools tested by GNY was 10%, but it was as high as 17% for some platforms.
GNY believes that today’s altcoin traders will be tomorrow’s bitcoin traders. So to launch the BTC Range Report GNY entered into an exclusive partnership with CoinSniper which is widely regarded as the #1 source for the best new cryptocurrency projects. Subscribers to the CoinSniper GNY newsletter providers traders with exclusive content and previews to measure the Range Report’s accuracy for themselves.
The BTC Range Report is available every Tuesday at 9am EST and spans a seven-day period. For the price of just $10, it can be purchased with ETH or GNY tokens, and access is provided directly through the user’s Metamask wallet. Version 1 of the GNY BTC Range Report offers:
- GNY’s daily projected volatility range for BTC as a graph and a table
- a forecast of which day will hold the weekly high and the weekly low
- forecast of daily volumes
- historical daily high and low prediction graph for the last two weeks VS BTC Actuals
- mean absolute percentage error (MAPE) for GNY historical daily high and low predictions VS BTC Actuals for the previous two weeks
Bitcoin Flash Crash: Is This a Buying Opportunity?
Bitcoin and cryptocurrency prices will “robustly rebound” after suddenly plummeting on Wednesday evening after minutes from the U.S. Federal Reserve’s last meeting were published, says the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.
This is the prediction being made by long-time crypto advocate Nigel Green, chief executive and founder of deVere Group, as the Bitcoin price shed $3,000 in just a few hours of hours, dropping from more than $47,000 to just under $44,000.
He says: “The minutes from the Fed have increased expectations that the central bank of the world’s largest economy will now move faster to raise interest rates to fight soaring inflation.
“As a result, there’s been a knee-jerk sell-off on Wall Street and the crypto market as it is perceived by some traders that such a move puts at risk the liquidity that has benefitted many asset classes, including Bitcoin.”
He continues: “However, I believe that we will see Bitcoin robustly rebound as the dust settles. This will then boost others in the crypto market.
“This is because Bitcoin and other digital currencies are widely regarded as a shield against inflation mainly due to its limited supply, which is not influenced by its price.
“In this latest inflationary period, Bitcoin has outperformed gold which, until now, has always been almost universally hailed as the ultimate inflation hedge.”
In this climate, says Nigel Green, and amid some peaks and troughs along the way “as markets never move in a straight line”, we can expect to see the price of Bitcoin and other major cryptocurrencies “revert to an upward trajectory.”
Last month, after the world’s largest cryptocurrency came off its all-time high of nearly $70,000 in November, he said: “Like many serious crypto investors, I’m embracing this short-term volatility for longer-term gains.
“I’m using the lower prices of Bitcoin and other major cryptocurrencies to top-up my portfolio. Why? Because like many major corporations, financial institutions, governments, prestigious universities, and household-name investing legends, I’m confident that digital currencies are the inevitable future of money.
“In our increasingly tech-driven, globalized world, it makes sense to hold digital, borderless, decentralized currencies. In addition, adoption and demand are increasing all the time, whilst at the same time, supply is decreasing.”
Of the latest Bitcoin price slump, Nigel Green concludes: “For people who are serious about building long-term wealth, this temporary volatility will be viewed as most other bouts of market turbulence: a buying opportunity. ”
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